To Weasel Clause Or Not To Weasel Clause?
Hi,
How many people here use a weasel clause when making an offer that says something like "offer subject to property inspection"?
On the one hand, I can see why you'd want a way to back out and get your earnest money back, especially if you found the property had something seriously wrong, such as foundation damage.
On the other hand, it seems like it would weaken the offer somewhat, where a bank REO officer is concerned, since they just want the property off their hands as quickly as possible. It might make the offer look insincere. Any thoughts?
I use "subject to buyer making and approving an inspection within 24 hours of closing"
I always put a clause in. (Subject to approval of my partner / inspection / financing / due diligence / etc.)
Not all of these, it depends on the situation. I wrote an offer on a property I had never seen. The offer was subject to inspection, financing, and subject to an appraissal that was meant to verify the value of the home that was stated to me.
It was a great deal and time was of the essence. As it turned out I put my offer in just a bit too late (one day).
My 2c
I never put in a weasel clause. The only thing that I put in close to one is that I have them expire within a day or two.
I write mine as cash offers. They are taken very serious. I don't get every property that I write up but I always get a responce even on my low ball offers.
When I bought my personal home in a new subdivision the builder was blown away that I made a cash offer.
Hey,
In general, I would not consider an inspection or financing clause a "Weasel Clause". For example, if the deal IS based upon you getting a new loan, there is nothing weaselly (sp) about it.
BUT a clause that says it is contingent upon partners approval, etc, etc is nothing but weasel. And could very easily be rejected out of hand.
I also agree with lacashman that nothing hits home harder than an all cash, no closng costs and close in 7 day offer. Your offer can be significantly below everyone else's and still get the house.
Quote:
On 2003-07-23 00:21, lacashman wrote:
I never put in a weasel clause. The only thing that I put in close to one is that I have them expire within a day or two.
You mean the offer expires in a couple of days if they don't respond?
Also, what does an "all-cash" offer mean? Does it just mean you're not subject to getting financing? If I am pre-approved for financing with a 2 week closing on new loans, isn't that pretty much the same thing from the seller's point of view?
Thanks
andrewb,
I NEVER MAKE AN OFFER~~~WITHOUT AN OUT!!!
....and I am NOT a Weasel!
....as always,
GoodInvesting, Rocky
Good topic.. I have it in my contracts as well to use for exit strategy only based on if there is something severely wrong with the property. The down side to this is that investors and buyers out there use this to shop the contract with no intentions of closing, leaving the seller at times on their own. I do not approve of these practices and find people that do that unethical. If I see an investor doing that they no longer get a call from me. Although, I have bought houses from distressed sellers thanks to them!
See, that's the beauty of my clause. Not one of you caught it.
I didn't say contingent upon approving a walk through up to 24 hours before close.
I said MAKING and approving a walk through 24 hours before close.
No one catches it.
WEASEL CLAUSE is slang for a contingency clause. Sometimes used 'to Weasel out'. Most of the time Contingency clauses are important; Buyer & property to qualify for a new loan, Buyer's approval of Termite Report, Property Inspection by Licensed Contractor, Certification of Well/Septic tank are a few of the most common. Most of the time you would be Crazy to make an offer without one!
pmatheson1,
YOU ARE CORRECT....SIR!!!
....as always,
GoodInvesting, Rocky
Quote:
On 2003-07-23 16:29, pmatheson1 wrote:
Most of the time you would be Crazy to make an offer without one!
Why would I be crazy for not using one? I have already inspected the property. I already know what I will need to do and how much it will cost BEFORE I make an offer.
But I have the ability to close on any deal that I write up. Which is why lenders and realtors take mine serious. I can get an offer accepted at a lower price than one with a lot of weasel clauses.
So how am I crazy for making more profit?
Quote:
You mean the offer expires in a couple of days if they don't respond?
When you write an offer you are obligated to perform untill a counter is written or the offer expires. (a counter is a reject of your offer)
If my offer expires and they come back latter I can perform but I do not have to.
When they ask why does this expire so quick? I say that I am looking at a few deals if they don't want to play I will do another deal.
I think all cash is great!
I am getting ready to sell my principle residence for approx 180k (I owe 50). I have a great income and money in the bank. But... I hate paperwork and all the nonsense that goes with getting a buyer approved through the process, 3weeks for appraisal etc. etc.
If I had a full price offer subject to financing and one for 10-15k less & close in 7 days I think I would save myself the carrying costs of the 2 months it will take to close, the hassle, and go for the lower cash offer. Money talks!
[addsig]
Quote:
On 2003-07-23 22:32, lacashman wrote:
Why would I be crazy for not using one? I have already inspected the property. I already know what I will need to do and how much it will cost BEFORE I make an offer.
Because there might be something seriously wrong with the property that you didn't spot before making the offer?
I guess my biggest fear as a newbie is of getting stuck with some monumental foundation problem or something when it's too late to back out. Is there anything I can do myself (besides looking thoroughly for cracks) to reduce this risk as far as I can? What steps would a professional property inspector take to check for these types of problems?
Thanks
lacashman,
you said
"Why would I be crazy for not using one? I have already inspected the property. I already know what I will need to do and how much it will cost BEFORE I make an offer.
But I have the ability to close on any deal that I write up. Which is why lenders and realtors take mine serious. I can get an offer accepted at a lower price than one with a lot of weasel clauses.
So how am I crazy for making more profit?"
Enough Cash can solve almost any problem...If you are in that position, I salute you!
However, most of us common folk are better off judiciously using a contingency or two. Then, being able to discover a problem prior to closing, you have The Hammer and don't have to close. Instead of attempting to have the seller pony up later for what he knew (or should have known) prior to closing.
Quote:
On 2003-07-24 11:17, pmatheson1 wrote:
Instead of attempting to have the seller pony up later for what he knew (or should have known) prior to closing.
Go back and read the first post he is asking about a bank REO. They don't know what is wrong with the property. They don't want to know.
They want a offer that will close.
If your concerned about missing something big hire an inspector. If you don't want to hire before writing your offer put it in your offer that you can have the property inspected within 2 or 3 days of offer acceptance. This way they know that you will be draging this out.
They want it sold not sale pending.
lacashman,
Your last contribution was one example of "a contingency".
Are you saying that even you, might have a need for a Contingency, now & then?
Quote:
On 2003-07-25 17:18, pmatheson1 wrote:
lacashman,
Are you saying that even you, might have a need for a Contingency, now & then?
Me no I NEVER have one.
When I bought my house from a builder my offer did not have one. (the agent had never written one up without a finance contingency)
Now if a person who did not know how to inspect a property wanted to write an offer as close to cash as possible then that would be the best way to do it.
The Bank would understand that you may need the advice of a pro. But they do not want to wait 30 days for your inspector to come by.
One note on this if you will be doing this you need an inspector on your team. You will need a commitment from them that they will inspect any property for you within a set time frame. If they say one day then write your offer to allow two days for the inspection.
Let them know that you do not need the report then but a phone call with a quick run down of what was found.
Its a good idear to inspect at least the first few. This report can help you determine what to repair, allthough your buyers report will vary. It's important to leave some repairs for your buyers inspector to find. If the foundation isn't leaning or broken than it isn't leaning or broken.If there is no sand tunnels there is no termits. If the house is occupied the main drains. The point is inpectors rarly touch or move anything to inspect, I do. every picture tells a story no matter who is looking at it. Well(pottable water) septic radon are a differant story Personally I risk radon, (cheap fix) never had it. My offers have no contingency even if I'm financing. If not I try a two week closing. Strong offers mean more acceptance even for new listings